NEW YORK (TheStreet) -- Cinemark Holdings (CNK) shares are down -2.4% to $34.73 on Monday after being downgraded to "neutral" from "buy" with a price target of $36.75 by analysts at B. Riley.
The movie theater company's downgrade comes following a July 4 weekend in which ticket sales were down 44% across the industry from the previous year.
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TheStreet Ratings team rates CINEMARK HOLDINGS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate CINEMARK HOLDINGS INC (CNK) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the Media industry average, but is less than that of the S&P 500. The net income increased by 8.7% when compared to the same quarter one year prior, going from $32.59 million to $35.44 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 14.6%. Since the same quarter one year prior, revenues slightly increased by 9.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Net operating cash flow has increased to $61.88 million or 45.29% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 5.61%.
- Compared to where it was 12 months ago, this stock has enjoyed a nice rise of 26.30% which was in line with the performance of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- CINEMARK HOLDINGS INC has improved earnings per share by 10.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CINEMARK HOLDINGS INC reported lower earnings of $1.28 versus $1.47 in the prior year. This year, the market expects an improvement in earnings ($1.81 versus $1.28).
- You can view the full analysis from the report here: CNK Ratings Report